lean thinkers it’s about developing relationships, trust, and building
highly capable suppliers.
Most of Delphi’s second-tier suppliers are comparatively small companies
(e.g., $150 million in annual sales). Often, the CEO is the company
founder. Typically, these suppliers are aware of lean manufacturing
and have sporadically applied several of the lean tools. But the com-
panies never experienced lean as a system and were amazed to learn
firsthand of the real power of the Toyota Production System. It was a
significantly different experience, leading to a collaborative “win-win”
approach to operating the entire business. Delphi encouraged a number
of these suppliers to apply for the Shingo prize.
The comprehensive lean supply chain approach is represented by
Delphi as a model with nine interdependent gears:
- Strategic sourcing (selecting suppliers with a broader set of expec-
tations for R&D)
- Lean supplier development engineering
- Cost management (in-depth understanding of specific elements
of cost)
- New model flawless launch
- Quality (at less than 20 ppm range at the time of the case study,
and lower ppm for more serious problems)
- Systems infrastructure (Information Technology)
- People development (each Delphi supplier management employ-
ee has 80 hours of training in cost management and lean
approaches)
- Supplier relationships (changing the mind-set so suppliers are
viewed as valued assets, not disposable commodities)
- Communications
Many companies get enamored with some pieces of the lean process,
e.g., “Let’s just do supplier development.” Delphi concluded that these
“gears” were all interdependent strategies. It needs to have the right
suppliers, with the right capabilities and the right internal purchasing
group, and those suppliers must understand real cost.
The biggest challenge for Delphi is moving from its traditional price-
based sourcing heritage from GM to a strategic sourcing approach
learned from Toyota and Honda. Traditionally, Delphi has relied on
competitive quoting to get lowest prices. It is moving to a more holistic
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